We have our community set up with very few Spaces - one for Using the community, a Watercooler, Ask a Question, Serving Citizens and a Projects on the Go space. The Projects space is open to all users, and allows all users to create a project, discussion and documetn within the space. I have space admins who can moderate the content and create a blog inside the space.

What I want to do is allow all users to create a blog inside a Project, but not inside the space.... anyone know if this is possible?

You are looking for personal blogs inside of project, or just the ability to blog within a project? I'm fairly certain personal blogs are only possible at the "root" level and cannot be contained within content containers (spaces, groups, projects).

It sounds like your question is, "can I grant blog create permissions at the project level, but not at the parent space level?" - I just posted this question on your behalf in the public Support community: The specified item was not found.